Earlier quoted context omitted.
I was replying to a comment about “a bunch of excited 20y”. For what it’s worth, I was also 35 once.
Duly noted. Hopefully you're not referring to a past life.
Definitely 35 are no longer in my future!
YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
401–410 of 411 posts
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#402Earlier quoted context omitted.
That raises an interesting ethical problem, really; should there be a duty to report this sort of thing, or is "scheme X is fundamentally flawed/a scam and investors will lose everything" legitimate proprietary information? As I understand it, various analysts were pretty sure at the time that Madoff's scheme was a Ponzi, but in general they didn't tell anyone (in fairness, one attempted to and had trouble getting li…
I don't know if it should be illegal to be a fool. Where is the line between an outright scam and just people believing their own bullshit.
No post body was provided.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#403Quick comparison between archive.org March 27th snapshot 27 March 2022 > There are no lock-up periods. Withdraw your funds any time and keep the interest you earned. 18 May 2022 > There are no long-term lock-up periods. These guys are going under. [1] https://web.archive.org/web/20220308041252/https://www.stabl...
They didn't plan for a black swam. I think that they only kept so much money around to do redemptions (fractional reserve) assuming that there wouldn't be a run on the bank. But then when a run on the bank happened, they were screwed as they had been locking up the funds.
No post body was provided.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#404Earlier quoted context omitted.
VCs are unfortunately, on the whole, all too discerning when it comes to Web3. It's a meme now in the community that when a VC and tokens are involved, there's a good chance they are getting preferential treatment and using the end users as their exit liquidity. That's not necessarily the case here but "greed" has become a general theme and the motivations behind otherwise-puzzling investments become clear when viewe…
Without wanting to defend the VCs, this is the same deal they would strike by buying equity in a company. It's in their interest to take a stake at lowball prices so they can 100x or whatever when it's time to IPO.
This scheme is certainly faster than an IPO which usually takes 10+ years
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#405Earlier quoted context omitted.
stablecoins don't promise to hold the peg 100%. they promise to be able to repeg in times of severe distress. even some money markets broke the dollar. they had to be bailed out by the government. what about makerdao makes it reliant on dao goodwill? the incentive to restore the peg is the expectation of profits from liquidating the overextended.
>stablecoins don't promise to hold the peg 100%. I didn't said that. Once they're listed on "exchanges" or traded on DEX, their price isn't under control of the protocol, and in theory can be anything. >they promise to be able to repeg in times of severe distress. even some money markets broke the dollar. they had to be bailed out by the government. MMFs are funds with the NAV which supposed to be around $1.00 (that…
I don't know the ins and outs of MakerDao. Trying to understand your point. If they were long ETH, are you saying they should still have let the liquidations happen for economic reasons? Also asking in good faith here: did you find specific instances of insolvency or are you assuming eth was falling fast enough for the liq action to be insolvent?
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#406Earlier quoted context omitted.
>stablecoins don't promise to hold the peg 100%. I didn't said that. Once they're listed on "exchanges" or traded on DEX, their price isn't under control of the protocol, and in theory can be anything. >they promise to be able to repeg in times of severe distress. even some money markets broke the dollar. they had to be bailed out by the government. MMFs are funds with the NAV which supposed to be around $1.00 (that…
I don't know the ins and outs of MakerDao. Trying to understand your point. If they were long ETH, are you saying they should still have let the liquidations happen for economic reasons? Also asking in good faith here: did you find specific instances of insolvency or are you assuming eth was falling fast enough for the liq action to be insolvent?
MakerDAO is based on a concept called CDP - Collateralized Debt Position. They call it debt, but it's basically a callable swap - you swap ETH with DAI (their "stablecoin"). Since ETH is a highly volatile asset (ranging from 30c to ~$4K), these swaps are over-collateralized, i.e. 150-200%. In case the market value of the ETH falling below the value of the DAI - the swap is called out (in their term - the CDP got liquidated). There are also additional fees (fines?) involved in liquidations.
If you lock your ETH into a CDP - you believe that ETH will not go down. You can also take the DAI from one CDP, exchange it to ETH, and then re-invest it into another (or the same?) CDP - thus creating a synthetic leveraged ETH long position. This can be repeated multiple times;)
My point was that people continued locking ETH into CDPs during the 2018's 90% fall in ETH prices, which only made sense if they had cheap ETH (i.e. insiders/OGs), and their goal was to prevent DAI from de-pegging.
MakerDAO's CDP doesn't seems to be the best instrument for making a LONG bet on ETH. You can just hold ETH, or you can buy ETH futures on Bitmex if you want leverage.
The problem with many algorithmic "stablecoin" designs is the assumption that there always will be speculators willing to take the risk in exchange of betting that peg will be restored. But unlike the designated market makers in some regulated markets, crypto speculators are not contractually obligated to take the risk.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#407They’re just one of several shiny fintech apps/websites running the same scam, a modern two-and-twenty on a ponzi — but with really nice UI. Alice (alice.co / @alice_finance) is another prominent one that may have lost customer funds, which was also using the Anchor protocol. It’s unclear how much they lost, but it’s interesting that Do Kwon’s name is still an actual logo listed on their home page. And Vertex Protoco…
Found another one from YC, that was fast https://techcrunch.com/2022/05/23/pebble-crypto-stablecoins-...
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#408Earlier quoted context omitted.
I don't know the ins and outs of MakerDao. Trying to understand your point. If they were long ETH, are you saying they should still have let the liquidations happen for economic reasons? Also asking in good faith here: did you find specific instances of insolvency or are you assuming eth was falling fast enough for the liq action to be insolvent?
MakerDAO is based on a concept called CDP - Collateralized Debt Position. They call it debt, but it's basically a callable swap - you swap ETH with DAI (their "stablecoin"). Since ETH is a highly volatile asset (ranging from 30c to ~$4K), these swaps are over-collateralized, i.e. 150-200%. In case the market value of the ETH falling below the value of the DAI - the swap is called out (in their term - the CDP got liqu…
Eh, I can see many people preferring decentralized leverage over centralized i.e. Bitmex. And even if there were other decentralized solutions for leverage back then, they may have liked the security posture and liq parameters of MakerDao specifically.
And nowadays (maybe even back then) US citizens cannot use Bitmex.
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#409Earlier quoted context omitted.
>stablecoins don't promise to hold the peg 100%. I didn't said that. Once they're listed on "exchanges" or traded on DEX, their price isn't under control of the protocol, and in theory can be anything. >they promise to be able to repeg in times of severe distress. even some money markets broke the dollar. they had to be bailed out by the government. MMFs are funds with the NAV which supposed to be around $1.00 (that…
I don't know the ins and outs of MakerDao. Trying to understand your point. If they were long ETH, are you saying they should still have let the liquidations happen for economic reasons? Also asking in good faith here: did you find specific instances of insolvency or are you assuming eth was falling fast enough for the liq action to be insolvent?
[deleted]
Re: YC W22 Stablegains is being sued for losing $42M in funds from 4878 customers
#410Earlier quoted context omitted.
MakerDAO is based on a concept called CDP - Collateralized Debt Position. They call it debt, but it's basically a callable swap - you swap ETH with DAI (their "stablecoin"). Since ETH is a highly volatile asset (ranging from 30c to ~$4K), these swaps are over-collateralized, i.e. 150-200%. In case the market value of the ETH falling below the value of the DAI - the swap is called out (in their term - the CDP got liqu…
Eh, I can see many people preferring decentralized leverage over centralized i.e. Bitmex. And even if there were other decentralized solutions for leverage back then, they may have liked the security posture and liq parameters of MakerDao specifically. And nowadays (maybe even back then) US citizens cannot use Bitmex.
Correct, but it misses the point.
Users need to monitor their open CDPs and add collateral if they are at risk. This has been done to protect users from paying the liquidation penalty fee, which is ~ 13%.
Also, do you really need leverage if your ETH's cost basis is 0 to 30c at the time when market price was in the range of $141 to $816 range?
It's all rounding error to you, you can basically print DAI out of thin air.